Selling Apple is a sucker’s play

Commentary: What are the media’s responsibilities?

NEW YORK (MarketWatch) — Are you thinking of selling shares of Apple Inc.?

Maybe you’ve been reading too much. Don’t be a sucker.

When it comes to the stock market, the suckers act on emotion. The long-term winners grit their teeth and hang tough. As in everything else, there are exceptions to the rule, but this is a reliable indicator. Just because Apple suffered a recent losing streak on Wall Street doesn’t necessarily mean it is time to back up the truck.

Apple, by all indications, remains the same tech/consumer products juggernaut that it appeared to be the day before its stock-market slump began.

Apple a cheap stock? You betcha!

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Investors should give Apple's stock a close look because the stock price can't keep up with the company's extraordinary earnings growth. Photo: Getty Images.

Granted, Apple’s decline was striking. At the close of trading on Monday, Apple’s stock had dropped 4.1%, pushing its descent to a fifth consecutive trading session. Apple was then down 9.9% from its intraday high of April 10.

One more tick down and Apple would have reached the 10% mark that equities mavens uneasily label a “correction.”

The naysayers were in full voice because they had gotten so accustomed to watching Apple’s shares defy gravity day after day. In fact, the five-session losing streak was the longest since a seven-session run that ended last October.

Apple’s shares rebounded on Tuesday, closing up about 5%.

It’s easy to understand why people recently started to freak out. The five-day decline knocked off more than $50 billion from Apple’s market capitalization. As The Wall Street Journal pointed out, that figure amounts to more than Hewlett-Packard’s
HPQ, -0.33%
total market cap of about $48 billion.

Stacey Delo/MarketWatch

Shrine to Steve Jobs in front of Apple's San Francisco store after the founder’s death.

Understand, I’m not a licensed broker or a financial planner or any kind of an investment advisor. I don’t even play one on television. But I’m a journalist who has been following for a long time — and, frequently, chronicling — the stock market and investor psychology.

I remember writing about the Oct. 19, 1987 stock market crash — Black Monday — when the market plunged some 22%. Suckers raced for the sidelines, barely taking a deep breath to see that a plethora of quality stocks could be snapped up at incredibly cheap prices. The smart investors did just that.

Apple is a fascinating company for journalists to write about because the elusive concept of market psychology plays a big part in its aura.

Which prompts the question that investors must answer for themselves: Six months after the death of its visionary, legendary leader Steve Jobs, is Apple
AAPL, -0.87%
now a buy or a hold or a sell?

What responsibility should journalists assume in influencing investors? Is it our domain to raise questions, which may smack of self-fulfilling prophecies, in anticipating Apple’s demise? Or, should be we cover the news strictly by the numbers and not hype the story?

To a degree, Apple is a media creation. A lot of companies do more important work. Apple makes products that are largely fun time sucks. But there’s so much mystique around the company. The brilliant and mercurial founder, the sleek, elegant and much-hyped products, their always crowded stores filled with people happy to pay top dollar for the latest fad. When Steve Jobs died, people made comparisons to Thomas Edison, for goodness sake.

We should avoid hype. A story as multidimensional and important as that of Apple requires no frills. The facts speak for themselves.

Feeling burned?

But reporters remember, all too well, the Wall Street collapse of 2007-2008 and many still bear the scars of the crash of the tech market at the turn of the century. Many onlookers blasted the media for a) acting like cheerleaders for the stock market or b) failing to provide cautionary information to gung-ho investors.

Many of us feel burned by the public’s criticisms. We don’t believe we were unprofessional for the way we covered the tech meltdown. We also resent the implication that we were acting like ostriches when Bear Stearns and Lehman Brothers crumbled.

Apple continues to be the most compelling story in American business because of its size, the popularity of its many products, the uncertainty of its course in the post-Steve Jobs age and the ever-present questions surrounding the prospects for its stock shares. It is always a lightning rod for controversy and conversation.

But you can bet that Apple will draw bigger, brassier headlines whenever its stock falls. Say, Apple’s stock is always supposed to go up, right?

The bottom line is simple. If you’ve made enough money from owning Apple, you should sell. But if you are considering heading for the exit because of negative speculation, rethink your strategy. After all, you can’t believe every thing you read.

MEDIA WEB QUESTION OF THE DAY: What do you like or dislike about the way journalists cover Apple?

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